With the increasing commercialization of the Internet, methods of performing payment transactions are becoming well known and new payment methods are desired. In an effort to expand the available sources of payment, methods have been developed to utilize checking and savings account funds to perform Internet transactions. Some methods allow the use of “electronic checks” to perform transactions.
There are a number of problems, however, associated with current electronic check methods. For example, since the flow of the current electronic checks replicates the flow used for paper checks, the merchant is unsure if the electronic check will be paid and therefore delays shipment of the goods to the customer for many days. To the customer, despite the transaction having the appearance of being on-line, it takes several days for his account to be charged. Another scheme requires the customer to deposit funds into a trusted third party's account before the customer can perform a transaction. Lastly, schema which can give on-line approvals are under development.
For a customer to be able to use the currently available electronic checks, the customer must be a member of a bank or financial institution that offers this service. Over the next 5 to 10 years, however, only a handful of financial institutions are estimated to participate in issuing electronic checks or the more efficient “electronic payment instructions.” Because of this limited participation, the majority of customers will not have access to electronic checks or electronic payment instructions. Thus, the number of purchasers that a merchant can attract and serve with an electronic check or an electronic payment instruction option is limited.
Additionally, for example, not only must the customer be a member of a participating financial institution, but the merchant must also set up procedures for these types of transactions to deal with the limited number of participating financial institutions. Due to the limited number of customers who would utilize this payment method, a merchant may be discouraged from expending the time and money to establish such a system.
Further, these new Internet checking and savings account transaction options present the merchant with a whole new set of responsibilities. Not only must the merchant establish new procedures to monitor and fulfill these orders, they must also keep track of verifications and credits. Many merchants do not want to deal with these issues or cannot afford to hire and train personnel who are able to handle and monitor these new functions.
Therefore, a solution to these problems is needed to improve the utilization and acceptance of Internet transactions using checking and savings accounts by merchants.